From Rs 2,870 in November, prices moved up to Rs 3,353 per quintal on Friday, which was the highest in the last 16 months

Soybean prices are up 20 per cent since October and have touched 16-month high amidst increased import duty for oil, increased demand from the crushing companies and lower production estimates. Prices are expected to remain firm in the coming weeks as well.

Soybean prices had remained subdued in the past two years due to lesser demand from the crushing sector or higher production. In 2014-15, soybean prices used to trade around Rs 4,000 per quintal. From there, prices dropped and were trading below Rs 3,000 per quintal during most parts of the last two years.

“Though the production was lower in 2015-16 at around 6.9 million tonnes, there were large carryover stocks. As the soy oil prices in the international market were lower, imports had gone up and the crushing industry was not buying soybean from the farmers and traders,’ said Ritesh Kumar Sahu, fundamental analyst, agri-commodities, Angel Commodities.

As per the data from the Solvent Extractors Association (SEA), in 2016-17 the production too went up to 10.57 million tonnes and kept the demand subdued. Due to a lower price realisation, farmers planted less soybean this year and shifted to other crops, mainly cotton, for better returns. As per SEA estimates, 2017-18 production is projected to be 8.7 million tonnes, whereas the Soybean Processors Association of India (SPAI) pegs it at 9.14 million tonnes. Both estimates show a drop in production. Arrivals at the markets in the past few weeks also have been falling.

While the production dropped on one side, the demand went up on the other after the government increased the import duty in November. The government hiked import duty on crude soybean oil by 12.5 per cent to 30 per cent and refined soybean oil by 15 per cent to 35 per cent in order to safeguard the interests of farmers. Once import cost of oil went up, crushing companies started procuring more soybean from the farmers and the prices started recovering.

From Rs 2,870 per quintal in November, prices moved up to Rs 3,353 per quintal last Friday, which was the highest in the last 16 months. Since October end, prices have moved up 20 per cent and 9.6 per cent since the beginning of 2018.

Another factor that supported the price movement was the incentives for soymeal exports. While the crushing increased, the government too announced incentives for exports and soymeal shipments went up by 14 per cent. As per SEA monthly reports, India’s soymeal exports during October-December stood at 579,000 tonnes against 507,000 tonnes during the year ago period.

“Going forward, we expect soybean prices to trade higher and touch Rs 3,500 per quintal in the coming weeks. Prices will receive support from expectations of improved procurement of soybean for crushing, good domestic demand for oil and export demand for soy meal. Due to lower imports of soy oil, majority of domestic consumption will be fulfilled by domestic crushing,” said Sahu. Prices may remain firm till April when this year’s monsoon updates come.